DSTI/ICCP/TISP(2004)2/FINAL 
MAIN POINTS 
This paper addresses two areas. First it provides an overview of the structure of the market for domain 
name registration with a particular focus on generic Top Level Domains (gTLDs). The aim of this work is 
to provide a review of the reforms introduced by ICANN and their impact. The second focus of the paper 
is a discussion of the main procedures available to ICANN to allocate resources. 
ICANN's management of the Internet's domain name system (DNS) is aimed at benefiting users of 
the Internet. This goal needs to be borne in mind in considering changes to the DNS, because the networks 
it supports have become a critical part of economic and social development. Potential efficiency gains, in 
managing the DNS, need to be weighed against their potential impact on the wider economic endeavours 
and social activities the Internet supports. ICANN is right to be cautious to preserve the benefits wrought 
by the Internet and to be conscious of the need to enable the benefits which can accrue from further 
innovation and competition. The paper concludes that ICANN's reform of the market structure for the 
registration of generic Top Level Domain names has been very successful. The division between registry 
and registrar functions has created a competitive market that has lowered prices and encouraged innovation. 
The initial experience with competition at the registry level, in association with a successful process to 
introduce new gTLDs, has also shown positive results. 
As with any reform, there have been challenges and some further initiatives may be required. One 
challenge has been for the new gTLDs to win recognition and acceptance by users. The Domain Name 
System's need to have unique identifiers, and a consequent need for there to be a single registry for each 
name, means that any registry can exercise a degree of monopoly power over the domain for which it has 
responsibility. To some extent this can be addressed by competition between registries, but it will also 
require ongoing contractual oversight by ICANN. The extent to which such a requirement may be 
lightened depends on the future success of ICANN's reform process, in terms of the acceptance of new 
gTLDs by the market. However, the large investment many users have in their domain name makes the 
cost of transfer between registries, and therefore a change of top level name, prohibitive for them. 
The existence of defensive registrations, as well as a combination of domain name speculation and 
traffic aggregation, makes it difficult to assess the real demand for the new gTLDs that have been 
introduced. Initial experience suggests that user demand for new names may be relatively limited. Much of 
the user focus is still on 
.com 
and the other traditional names, with market acceptance of new names being 
lower than projected.
For many existing users, new gTLDs simply represent an additional cost in terms of 
defensive registrations. On the other hand supporters point to the promise of new services and 
opportunities for broadening participation that they say will arise with the creation of new names. This 
potential means that there is support in some sections of the business community for the creation of some 
new names. 
ICANN faces a number of allocative decisions over the coming years, some of which relate to the 
creation and allocation of new resources. For many of these decisions, the paper does not seek to be 
prescriptive as they are decisions to be taken by ICANN in consultation with all stakeholders. There is, 
however, an additional reason. In some instances, the actual resource to be allocated needs to be defined, 
so that issues such as whether scarcity exists can be determined prior to deciding the most appropriate 
allocation procedure. Accordingly, the paper discusses the pros and cons of different procedures, such as 
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